Steenkamp v Edcon Ltd

Premature termination notice considered and majority in ConCourt pointed out that when a dismissal is held to be unfair reinstatement is possible but not when it is invalid and this means that employers against whom an order has been made declaring the dismissal invalid and who does not want to continue employment will have to dismiss them again otherwise they remain employed. The minority judgment decided that if notice of termination does not comply with s 189A(8)(b)(i) there is no valid termination and the contract of employment is not terminated and so there is no dismissal in terms of section 186(1)(a) of the LRA.

Essence

Minority decided that premature termination notice was unlawful and invalid irrespective of the issue of fairness.

Decision

(CCT46/15, CCT47/15) [2016] ZACC 1; (2016) 37 ILJ 564 (CC); 2016 (3) BCLR 311 (CC); [2016] 4 BLLR 335 (CC); 2016 (3) SA 251 (CC) (22 January 2016)

Order:

Disallowed appeal from judgment of LAC dated 3 March 2015

Judges

Zondo J (Mogoeng CJ, Moseneke DCJ, Jafta J, Khampepe J, Madlanga J, Matojane AJ, Nkabinde J and Wallis AJ concurring): [87] to [195]

Cameron J (Van der Westhuizen J concurring): [1] to [86] – see below.

Heard on: 8 September 2015

Decided on: 22 January 2016

Related books

Darcy du Toit et al Labour Relations Law: A Comprehensive Guide 6ed 925 pages (LexisNexis 2015) at 495

Darcy du Toit et al Labour Law Through The Cases – loose-leaf service updated 6 monthly (LexisNexis 2021) LRA 189A(8)

Van Niekerk and Smit (Managing editors) et al [email protected] 5ed (LexisNexis 2019) at

Myburgh and Bosch Reviews in the Labour Courts 1ed (LexisNexis 2016) at

Reasons

“[85] If notice of termination in retrenchments subject to section 189A does not comply with the provisions of section 189A(8)(b)(i), where no facilitator has been appointed, as here, there is no valid termination. In that event, the contract of employment is not terminated. And if the contract of employment is not terminated, there is no dismissal in terms of section 186(1)(a) of the LRA.

[86] The employee applicants and NUMSA are thus right. When Edcon dismissed the individual employees without waiting for the time periods in section 189A(8) to expire, it acted without effect in law. The dismissals were a nullity. They had no force and effect. The question of what remedy flows in practice from this conclusion must await another day and another court.”

Quotations from judgment

Note: Footnotes omitted and emphasis added

CAMERON J (Van der Westhuizen J concurring)

Introduction

[1] The Labour Relations Act (LRA) provides that an employer undertaking large scale retrenchments may give notice to terminate the contract of employment only once 60 days have elapsed after extending an invitation to consult on an impending retrenchment. The statute further provides that, in these retrenchments, notice of termination of employment “must” be given in accordance with its provisions. If an employer dismisses in violation of this injunction, are the dismissals invalid? The applicants (employee applicants), joined by the National Union of Metalworkers of South Africa (NUMSA), say Yes. The respondent, Edcon Limited (Edcon), says No. Contradictory decisions of the Labour Appeal Court point in opposite directions. These proceedings seek an answer from this Court.

Background

[2] Edcon employed almost 40 000 sales, administrative and other staff in 1 300 retail outlets across nine countries in Southern Africa. But its business began to falter. During April 2013, it started restructuring for operational requirements. By mid 2014, the process had resulted in the retrenchment of about 3 000 employees.

[3] During the retrenchment process, Edcon first issued written notices in terms of section 189(3) of the LRA. These informed its workforce in general terms that it was contemplating dismissal for operational requirements and invited consultation. Because of the size of the workforce, and the scale of the proposed retrenchments, section 189A applied. This requires that, in respect of any dismissal it covers, “an employer must give notice of termination of employment in accordance with the provisions of this section”. The effect of non-compliance with this provision is at issue.

[4] For large-scale retrenchments, section 189A provides the option of facilitation. This meant Edcon reached a critical point in the process. Under the statute the parties may agree on facilitation, or, if not, either the employer or a representative trade union may request that the matter be facilitated. This entails a joint consensus-seeking process to mitigate adverse consequences.

[5] But, if a facilitator is not appointed, section 189A(8) imposes a minimum 30 day time bar. The period is calculated from the date on which the employer issues notices in terms of section 189(3). During that period, employees and employers are barred from taking further steps. Neither party may refer a dispute about the impending retrenchments to the applicable bargaining council or to the Commission for Conciliation Mediation and Arbitration (CCMA). It follows that employers, in particular, are not entitled to invoke the power the provision confers on them after the periods have elapsed, namely to give notice to terminate contracts of employment in accordance with section 37(1) of the Basic Conditions of Employment Act (BCEA).

[6] The dispute arose because Edcon issued notices of termination before this 30 day period had elapsed. In consequence, the employee applicants made 51 referrals, involving 1 331 employees, to the Labour Court.

These challenged the validity of the dismissals. The first, second and further applicants are employees involved in four of these referrals.

[7] The time between Edcon’s section 189(3) notices and the notices of termination varied. In the case of Ms Karin Steenkamp, the first applicant, it was six days. In other cases, it was more than 60 days. Neither Edcon nor the applicants referred a dispute to the CCMA in terms of section 189A(8).

None of the employees sought to embark on a retaliatory strike and none approached the Labour Court to compel Edcon to comply with a fair procedure or to interdict or restrain it from dismissing them before complying with a fair procedure. Nor did the applicants refer an unfair dismissal dispute to the CCMA in terms of section 191(1)(a) of the LRA.

[8] More importantly, none of the employee applicants contest any aspect of the procedural or substantive fairness of the dismissals. They have not sought to impugn the fairness of Edcon’s unauthorised conduct. Nor have they tendered to return the severance packages Edcon paid them. Their sole ground of complaint is formal. It is that Edcon gave short notice under section 189A(2)(a) and (8). And so the single issue before us is the effect of not complying with those provisions.

Labour Appeal Court

[9] Confronted with its non-compliance with the notice periods, Edcon initiated these proceedings with the specific object of challenging De Beers and Revan, the Labour Appeal Court decisions holding section 189A dismissals on short notice invalid. The Judge President specially constituted the Labour Appeal Court, sitting as a court of first instance, to hear the case.

Edcon invited the Court to reinterpret section 189A(2)(a) read with section 189A(8) so as to conclude that dismissals in violation of those provisions’ time periods were not invalid. The Court accepted the challenge, and upheld it.

It found in favour of Edcon. It found the approach in that Court’s two earlier decisions “obviously wrong”.

[10] At the base of the Court’s judgment lies the distinction between a failure by an employer to give proper and valid notice of termination in terms of the contract, on the one hand, and failure to give valid notice in breach of a statutory provision. The former, the Court said, can be construed as a breach of contract. If that breach is material, it may result in a wrongful or unfair termination of employment.

This in turn entitles the employee to seek specific performance or damages for wrongful termination, but also reinstatement or compensation for unfair dismissal under section 193 of the LRA.

[11] By contrast, breach of a statutory notice requirement violates the principle of legality. This allows the employee to challenge the lawfulness of the action by means of review proceedings to obtain an order of invalidity and reinstatement.

In essence, the Court held that the latter breach, with its consequences, is not found in the LRA. Instead, it found, the statute contemplates and provides remedies for one kind of dismissal only: unfair dismissal, as defined in the statute.

This takes place when an employer unfairly terminates a contract of employment. And a dismissal so defined is an unfair dismissal, whether or not the termination also violates section 189A(2)(a) and (8).

[12] The Court located this approach in the LRA’s definition of “dismissal”. This, the statute provides, means amongst others that “an employer has terminated employment with or without notice”.

The Court reasoned that the word “terminated” must be given its ordinary meaning. This is “bringing to an end” – regardless whether the action is lawful, fair or otherwise. A termination by an employer without giving proper or valid notice still constitutes a “dismissal” under the LRA. The statute provides remedies to address any wrongfulness or unfairness. But this does not alter the factual consequence of the termination. The employee is dismissed, fairly or unfairly, lawfully or unlawfully.

[13] The Court evoked the history of employment law jurisprudence in South Africa. It explained that the concept of an employment relationship is broader than the concept of a contract of employment. So a “dismissal” under the statute is not the equivalent of a lawful cancellation of a contract of employment. It is much broader:

“The statutory concept of dismissal is therefore not restricted to the contractual notion of lawful cancellation and recognises that contract law is an insufficient instrument to regulate the modern employment relationship.”

The Court found an “implicit acceptance” in Schierhout that a wrongful or “invalid” termination can nevertheless in fact bring a contract of employment to an end. This belief, it said, has persisted in our law.

[14] The purpose of the LRA’s wide definition of “dismissal” is to extend the statute’s scope to protect dismissed employees. The important practical result is that a wrongful termination without notice that does not constitute a lawful cancellation or rescission of an employment contract may still constitute an effective dismissal under the LRA.

[15] By contrast, the Court held, where dismissals contravene provisions in statutes other than the LRA, a fundamental principle comes into play; that they are void and of no effect, even though, the Court noted, this doctrine has softened somewhat because the remedies available are discretionary.

[16] Accordingly, the general principle that something done in contravention of a statute is void and of no effect, which Schierhout applied in the employment context, no longer applies in all cases. It depends on the proper construction of the particular legislation. And the consequence of the contravention depends on the nature of the discretionary remedies available.

The enquiry is thus contextual. The Court held that it involves consideration of: the right sought to be enforced and the wrong sought to be rectified; the subject matter of the prohibition; its purpose in the context of the legislation; the nature of the mischief the prohibition was designed to remedy or avoid; and any cognisable impropriety that may flow from invalidity.

[17] Here, the Court found, it was important that section 189A already offers the parties remedies to counteract non-compliance. Section 189A(9) licenses an immediate retaliatory strike. And section 189A(13) provides for an order compelling the employer to comply with a fair procedure, or for an interdict, reinstatement or compensation.

[18] Most pertinently, the Court held, De Beers and Revan introduce an anomaly: they remove a conventional dismissal from the scope of the LRA so that it cannot be assessed on the basis of fairness.

This is because categorising the dismissal as totally invalid leads automatically to reinstatement. By contrast, the remedies the LRA provides make it clear that reinstatement is not a competent remedy for mere procedural unfairness.

[19] The Court concluded that De Beers and Revan were wrong. Non compliance with these provisions does not lead to an invalid dismissal. The employee applicants, NUMSA and the Minister of Labour were ordered to pay Edcon’s costs.

In this Court

[20] The employee applicants and NUMSA in essence contend that the Labour Appeal Court misread the clear language of the provisions. Their purpose is to limit the employer’s unilateral use of economic power by imposing a time bar on dismissals. The time bar creates a compulsory cooling off period for conciliation and for the possibility of settlement, thus avoiding job losses, to be explored. The time bar is imperative and not directory. It must be complied with. And because disregard of it entails breach of a statutory prohibition, the remedy of specific performance must be available.

[21] NUMSA contends that section 189A(2)(a) of the LRA imports two effects into the mass retrenchment process.

  • It makes a notice of termination the only way to terminate the employment of an employee marked for retrenchment.
  • And it provides that the termination notice must be in accordance with section 189A(7)(a), where there is facilitation, or section 189A(8)(b)(i), where there is not.

[22] Edcon contends that, contrary to De Beers and Revan, where facilitation is not sought, an employer’s failure to refer a dispute to the CCMA for conciliation in terms of section 189A(8)(a) (where the employee does not do so), and the lapse of the time period thereafter, does not result in the ensuing dismissals being invalid.

The employees are dismissed for all purposes under the statute – and the statute confines them to their unfair dismissal remedies.

Section 189A affords them no additional contractual claim arising from an invalid dismissal when its notice provisions are breached.

[23] Edcon argues that the definition of “dismissal” in the statute must be interpreted widely, so as to include employees affected by a dismissal without proper notice (an “unlawful dismissal”). The recent amendment of the definition, Edcon urged, demonstrates that the section must be interpreted broadly. The purpose is to afford employees wide-ranging protection against unfair dismissal. And taking “unlawful” dismissal out of it would prejudicially harm that protection. Hence short-notice terminations should not be held invalid.

Issues

[24] The issues are—

a) whether leave to appeal should be granted;
b) whether non-compliance with the statutory time periods in section 189A of the LRA invalidates dismissals; and
c) costs.

Jurisdiction and leave to appeal

[25] Leave to appeal must be granted. The interpretation of the LRA, a statute that gives effect to the constitutional right to fair labour practices, is a constitutional issue. In addition, the ambit of the employment rights flowing from section 189A is an arguable point of law of general public importance, which this Court ought to hear. And prospects seem to me propitious.

Merits

The purpose of section 189A of the LRA

[26] The starting point is the provision that sets out the purpose of the LRA – section 1. This provides:

“The purpose of this Act is to advance economic development, social justice, labour peace and the democratisation of the workplace by fulfilling the primary objects of this Act, which are—
(a) to give effect to and regulate the fundamental rights conferred by section 23 of the Constitution;
(b) to give effect to obligations incurred by the Republic as a member state of the International Labour Organisation;
(c) to provide a framework within which employees and their trade unions, employers and employers’ organisations can—
(i) collectively bargain to determine wages, terms and conditions of employment and other matters of mutual interest; and
(ii) formulate industrial policy; and
(d) to promote—
(i) orderly collective bargaining;
(ii) collective bargaining at sectoral level;
(iii) employee participation in decision-making in the workplace; and
(iv) the effective resolution of labour disputes.”

[27] This shows that the LRA places particular emphasis on promoting the participation of employees in decision-making in the workplace and the effective resolution of labour disputes.

[28] Section 189A was inserted into the LRA in 2002. As the Labour Appeal Court noted, it aimed to enhance the effectiveness of consultation in large-scale retrenchments by reducing friction. There had to be a better way to manage disputes about dismissals for operational requirements affecting large numbers of employees. Section 189A sought to provide it.

[29]

  • First, the provision gave employees in mass retrenchments a new right. It offered them a choice between industrial action and adjudication as the means to try to resolve the dispute.
  • Second, it introduced the option of facilitation at an early stage and spelt out the requirements and elements of due and fair process.

To minimise strikes and litigation, the provision allows for compulsory facilitation by the CCMA, if either the employer or a consulting party representing the majority of at-risk employees asks for it. The parties are also free to agree to a voluntary facilitation.

[30] The appointment of a facilitator suspends the employer’s power to dismiss for 60 days. Once the notice of termination is given, the employees have the choice of either embarking on industrial action – an option not open in other dismissals – or referring a dispute regarding substantive fairness to the Labour Court.

If facilitation is not requested or agreed, there is a 30-day bar on referring a dispute to a bargaining council or the CCMA from the date on which notice in terms of section 189(3) is given, and in addition the employer may give notice to terminate only once the further period mentioned in section 64(1)(a) has elapsed. Edcon breached both time periods by issuing termination notices to retrenched employees early.

But once a referral to the Labour Court has been made, the right to strike is no longer available.

Thereafter the employer is free to give notice of termination.

For their part, once the periods have elapsed and notice of termination has been given, aggrieved employees may opt for industrial action or to refer a dispute about the substantive fairness of the dismissals to the Labour Court.

[31] Section 189A expressly limits the disputes that can be referred to the Labour Court.

Only those concerning a fair reason for the dismissal can be referred – in other words disputes about substantive fairness.

Both referral options expressly impose a time bar. Disputes about procedure under section 189A cannot be referred to the Labour Court by statement of claim, but must instead be brought by the speedier means of motion proceedings.

[32] The effect of the provisions, where the employees have opted for adjudication rather than to strike, is to separate process issues from questions of fairness.

Instead the section provides a mechanism to pre-empt procedural problems before the substantive issues become ripe for adjudication or industrial action.

[33] Seen thus, the first question is this:

  • how distinctive are the provisions of section 189A?
  • What do they add to the LRA’s other provisions dealing with dismissal and particularly with retrenchments?

The answer to that question may indicate the true purpose of their enactment, and hence the effect of non-compliance with what they demand.

[34] In argument, counsel for Edcon described section 189A as a “bolt-on” to section 189.

Its sole purpose, he contended, is to add extra fair process protections to those that section 189 already affords.

Section 189 itself, counsel maintained, prescribes what steps the employer has to take. And section 185, which confers the right not to be unfairly dismissed, or to be subjected to an unfair labour practice, forms the basis of a comprehensive legislative scheme that provides remedies for all unfair dismissals – including dismissals in breach of section 189A’s time periods. Section 189A thus provides no distinctive remedies on dismissal.

[35] In this way, according to Edcon, a termination of employment that is premature under section 189A(2)(a) and (8) is just another section 186-defined dismissal, with merely ordinary section 185 unfair dismissal remedies that ensue to sanction it.

On this approach, the provisions of section 189A do confer on the employee at risk of being dismissed in a mass retrenchment the extra facilitation, strike and interdict tools the provision spells out. But when it comes to the crunch of dismissal, they offer no special protection; in particular, they do not inflict the sanction of invalidity on short notice dismissals.

[36] This argument, like the reasoning of the Labour Appeal Court, is not without persuasive impact. Its force rests on two considerations.

  • First, the statutory definition of unfair dismissal specifically encompasses dismissals without notice.
  • Second, section 189A itself seems to provide remedies to the at risk employees in a mass retrenchment and their representatives.

The question is whether its design and purpose indicate that non-compliant dismissals are, in addition, invalid.

[37] As the Labour Appeal Court pointed out, the contrary approach introduces an anomaly to the statute’s treatment of dismissals. This is because it removes a non compliant section 189A dismissal entirely from the scope of Chapter 8 of the LRA.

Hence it “will not be assessed on the basis of fairness, merely because it was procedurally premature and branded as invalid”.

[38] The Labour Appeal Court’s response to this anomaly was to treat the concept of dismissal under the statute as uniform. This approach, which Edcon supported in this Court, seeks to meld the dismissal provisions of the statute into a uniform whole, so that dismissal under section 189A doesn’t stick out.

Its correlative is that it offers the attraction of a unified taxonomy of remedies: one statutory concept of dismissal, with one single set of statutory remedies. These are the remedies for unfair dismissal only, plus the specific strike and interdict remedies section 189A itself provides during the mass retrenchment process – but without the novel remedy of nullity for a failure to give proper notice, which is otherwise alien to the conceptions and scheme of the LRA.

[39] But there are considerable difficulties with this approach.

  • First, to see section 189A as a mere “bolt-on” to section 189 is to understate its significance.
  • Section 189 covers all retrenchments, big or small, individual or mass.
  • By contrast, section 189A deals with mass retrenchments only.
  • It exempts employers employing fewer than 50 employees from its provisions.
  • For those employing 50 plus, it provides a graduated scale of application, depending on how big the workforce is, and what proportion of it the employer proposes to retrench.

[40] So the provision sequesters off large-scale retrenchments for special treatment. By doing this, the legislature recognised their distinctive power to trigger labour unrest. More importantly, it recognised their impact on large numbers of employees’ lives, and the lives of their dependants, should joblessness ensue.

[41] In keeping with this, the provision creates processes that are distinctive from those applicable to other retrenchments. They do not apply to smaller employers.

It interposes compulsory facilitation, if either the employer or consulting parties ask for it. And it makes facilitation available also if the parties agree. In addition, it creates special remedies – mandatory order or interdict, plus strike – that are otherwise foreign to the employee’s armoury in retrenchments and unfair dismissals.

[42] Section 189A thus goes further than the general obligation, which the statute already imposes in section 189, to engage before retrenching in “a meaningful joint consensus-seeking process” so as to reach consensus on avoiding or minimising the threatened retrenchments.

It creates a framework of inducements and constraints whose design is to impel the employer to engage in that exercise with added focus and with particular single-mindedness.

[43] The obligation the provision imposes on the employer to give notice in accordance with its provisions (“must”) has to be seen against this background. It is not a mere procedural add-on to the processes that section 189 already creates. Nor is it a mere palliative for the impending retrenchment. On the contrary, it is foundational to the change of tone that section 189A signals, and pivotal to the shift of power its provisions seek to effect.

[44] In short, a dismissal that violates section 189A’s time periods does “stick out”. It cannot be smoothed into the larger fabric of the LRA’s treatment of dismissals. While it also constitutes a dismissal without notice under section 186(1)(a), it is also signally different from other dismissals covered by Chapter 8. Section 189A is exceptional, in wording and remedy and object and effect. It was enacted precisely to oblige the employer to deal differently with big retrenchments.

[45] The obligation it imports to respect the time periods it sets out (“must”) was enacted to create a dismissal-free zone during which consensus may be sought and alternatives may be explored. In other words, the employees must be safe from dismissal while the stipulated statutory periods elapse.

[46] To treat the time period obligation as merely directory – in other words, as having no consequence other than making the dismissal procedurally unfair for the purposes of section 185’s remedies – is to deny the powerful novelty the provision imports as well as to misjudge its structure.

The provision sought to effect a power shift from employers in mass retrenchments – and it did so in the best and most effective way. It rendered dismissals in disregard of its notice provisions invalid.

[47] Recognising this consequence has indisputable clout. It deprives the employer, for a specified period, of the ultimate power in the employment relationship – that of termination. Dismissal has been called “tantamount to capital punishment” in the employment relationship. Section 189A abolishes this sanction for the limited time its provisions decree.

[48] At the same time, even though only temporarily, it affords at-risk employees the continued advantage of their employment benefits and security. And all this in the service of focusing the employer’s attention, during the time freeze, on the possibility of avoiding the retrenchments altogether. The employer must stay its hand, while the employees remain protected. The possibly unappealing prospect of discussions and alternatives may, through force of circumstance, become more enticing. That is the statutory design.

[49] So the time period is to run unhindered. It is intended to quell employer steps that imperil the provision’s joint consensus-seeking aims. The judgment of Zondo J, which I have had the pleasure of reading, finds that the LRA does not expressly confer a right to be dismissed lawfully.

It bolsters this conclusion through an exposition of the LRA’s predecessors. It notes the removal of a criminal sanction for unauthorised conduct. It reasons that, since the LRA does not expressly provide for a right to a lawful dismissal, a litigant is not entitled to a declaratory remedy when dismissed in breach of the LRA’s provisions. This approach narrows the entitlement to a lawful dismissal. It infers from the absence of an express provision in the statute that protection against unlawful conduct must be understood to have been absorbed into the statute’s fairness protections.

[50] These are not unattractive propositions. But ultimately they do not seem convincing to me.

  • First, fairness and lawfulness overlap. We cannot rigidly separate them, banishing the latter from the purview of the statute. Evaluating fairness requires a judgment on competing interests and rights of both workers and employers. This is a value judgment. In this, a court must have regard to the statutory provisions before it, its scope and its objects. In this weighing, lawfulness and fairness are not exclusionary opposites.

[51] Second, the LRA has not impoverished a wronged worker’s cache of weapons. That the LRA creates specific remedies for most labour and employment disputes does not mean that it does not concomitantly create other remedies, especially when the claim is rooted in the language and logic of the LRA itself. The lawfulness ground, in other words, is a claim seeking to enforce compliance with the provisions of section 189A.

[52] Reliance on Chirwa is inapposite. The LRA did not extinguish causes of action. It supplemented existing remedies. It is open to a litigant to choose her remedy and to do so at her own peril. This Court dealing with Chirwa in Gcaba, came to precisely this conclusion.

Van der Westhuizen J said:

“Furthermore, the LRA does not intend to destroy causes of action or remedies and section 157 should not be interpreted to do so. Where a remedy lies in the High Court, section 157(2) cannot be read to mean that it no longer lies there and should not be read to mean as much. Where the judgment of Ngcobo J in Chirwa speaks of a court for labour and employment disputes, it refers to labour – and employment – related disputes for which the LRA creates specific remedies. It does not mean that all other remedies which might lie in other courts like the High Court and Equality Court, can no longer be adjudicated by those courts. If only the Labour Court could deal with disputes arising out of all employment relations, remedies would be wiped out, because the Labour Court (being a creature of statute with only selected remedies and powers) does not have the power to deal with the common law or other statutory remedies.”

[53] The applicants do not seek a remedy outside the LRA. Nor do they seek a remedy alien to its provisions. They rely on a unique remedy that section 189A has specifically afforded those vulnerable to mass retrenchment.

[54] Third, the failure to provide for a criminal sanction does not entail that there is no need to hold a party accountable for violating the provision’s prohibition on short service terminations. When an employer trespasses onto the minimum 30-day period, it rides roughshod over the aim of encouraging consensus and seeking to avoid mass dismissals. No criminal sanction is needed to spell this out.

[55] What of the remedies internal to section 189A? The interdict to compel a fair procedure, and the retaliatory strike? Understanding the unique character of section 189A’s dismissal protection entails certain correlative conclusions.

  • The first is that the provision’s compulsory time periods are not aspects of “a fair procedure” envisaged in section 189A(13).
  • The second is that employees given short notice may not go on strike for that reason.

[56] The Labour Appeal Court suggested that the mandatory and interdictory remedies of section 189A(13) are available to employees who receive short notice of termination. It also considered that employees in this position have available the retaliatory strike that subsection (9) envisages. From the availability of these remedies, the Court drew the conclusion that nullity did not follow from non compliance.

[57] The judgment of Zondo J reasons that the availability of these remedies must mean that non-compliance with section 189A(8) gives rise to a question of unfair procedure. Hence, nullity is not visited upon non-compliance. It also suggests that the other remedies in 189A provide “employees [with] . . . strong weapon[s] to deal with the employer”.

[58] The difference with the analysis here lies in the extent to which one recognises as distinctive the protections section 189A sought to introduce into a workplace at risk of large-scale retrenchments.

More particularly, it depends on appreciating the power that making a short-notice dismissal invalid has to constrain an employer to think again before effecting a mass retrenchment.

[59] The approach of the Labour Court and the judgment of Zondo J inhibit the efficacy of the process section 189A seeks to command. It seems to me to place a burden on employees, requiring them to rush to court, or to invoke “the nuclear option”, namely a strike, in an effort to secure compliance with section 189A(8).

[60] If the consequence of invalidity is central to the shift of power the provision introduces, and if it is integral to the provision’s purpose of seeking, if at all possible, to avoid mass retrenchments, then the Labour Appeal Court’s characterisation of the other remedies in section 189A cannot be accepted.

The remedies in subsections (9) and (13) are not available for short notice. This is because short notice is not merely a question of “fair procedure”. It serves a more powerful and more radical purpose – to constrain a rethink. And, unless disregard of the dismissal-free zone during a mass retrenchment process has a distinctive consequence, that pivotal statutory purpose will remain unattained.

[61] A further difference stems from the purposive interpretation of section 189A. The strike remedy is inapposite. It does not properly deal with the mischief section 189A(8) seeks to prevent.

Indeed, the strike option is of cold comfort, compared to the protection a statutory prohibition on dismissal for a 30 day period would afford. A strike accentuates the workplace calamities section 189A seeks to avoid.

Strike action imposes severe perils on an already declining employer, on the industry as a whole and, worst, on employees who are not at risk of retrenchment, for the whole enterprise may be shut down. Against these alternatives, reading the provisions at issue to entail the nullity of non-compliant dismissals seems both sound and sensible.

[62] Hence it is preferable to find that the dismissal is a nullity, and that a different set of statutory remedies ensues – those the employee applicants are seeking in these and related proceedings. This purposive approach favours an interpretation that non compliance with section 189A(8) goes to unlawfulness.

It results in nullity and affords the workforce affected remedies the provision itself creates, rather than reducing their armoury to only procedural fairness. This to me strikes an appropriate balance between workers’ and employers’ rights and interests.

Compliance with the notice period ought not to be construed as encouraging a “check list” approach to realising the protections in section 189A. Requiring employers to adhere to the dismissal-free zone is not for ticking boxes in the interests of formal compliance with the LRA. It is in the public interest to ensure, as far as possible, some measure of certainty in turbulent employment times.

[63] The provision’s wording reinforces this conclusion. So does its cross incorporation of the provisions of the BCEA. Section 189A(2)(a) stipulates that an employer “must give notice of termination” in accordance with the provisions of the section.

Section 189A(7)(a) provides that, where a facilitator is appointed, after the expiry of 60 days from the date of the section 189(3) notice of invitation to consult, an employer “may give notice to terminate the contracts of employment in accordance with section 37(1)” of the BCEA. Its companion provision, section 189A(8)(b)(i), similarly provides that, where a facilitator is not appointed, after the expiry of the stipulated periods, the employer “may give notice to terminate the contracts of employment in accordance with section 37(1)” of the BCEA.

[64] The provision’s reference to “notice to terminate” is, as NUMSA contended, redolent of the language of the contractual termination of employment, rather than merely of statutory unfair dismissal. Under the common law of contract, conduct by the employer that constitutes a repudiation of the contract does not, of itself, put an end to the contract.

What it does is to vest the employee with an election. She can stand by the contract. Or she can choose to accept the employer’s repudiation and bring the contract to an end.

[65] But at common law, that choice is the employee’s. Except where summary dismissal is warranted, the unilateral act of the employer in terminating the contract, whether by notice or other conduct, does not without more bring an end to the contract of employment. The same applies to an employee who gives short notice in violation of the contract: he or she may be obliged to serve out the notice period. In neither case does the unlawful repudiation of the contract have to be accepted by the other party.

[66] It has been observed that the common law contract of employment is “the key relationship” in the application of South Africa’s labour relations legislation.

Understanding its terms is essential to appreciating how the LRA and its predecessor legislation use, and generally expand, the terminology of dismissal, termination and notice. It is trite that a lawful termination of the contract of employment will not suffice to render the termination fair under the LRA. But the requirement that a termination be fair does not entail that an employer need not adhere to the requirements of terminating the contract lawfully, whether these arise from the contract itself, or, as here, from statute.

[67] By corollary, the LRA’s remedies have not supplanted the whole of the common law of contract. The right not to be unfairly dismissed, which the LRA affords, finds its application pre-eminently in circumstances where the employee’s contractual security of employment is tenuous.

Where, by contrast, the contract of employment affords the employee larger and firmer rights, and the employee wishes to rely on them, rather than on the LRA’s unfair labour practice remedies, he or she is entitled to do so. The LRA did not extinguish entirely common law rights arising from an agreement of employment. Hence, in this provision, the LRA by invoking the common law inhibition on unlawful termination, gives the employees additional protection.

[68] It is this common law location of the statute as a whole that the language of section 189A invokes. The same applies to the BCEA. Under that statute, it is well accepted that a dismissal on short notice is not effective to terminate the contract of employment. When either employer or employee seek to terminate, the BCEA requires that each give notice in terms of section 37. If either party does not, the contract of employment continues to subsist, affording both employee and employer a range of statutory remedies to enforce it.

[69] During the hearing, counsel for Edcon was asked whether, if the provisions of section 189A had appeared in the BCEA, rather than in the LRA, as a “bolt-on” to section 189, its stipulated notice periods would have to be considered peremptory. His answer was Yes. And it had to be Yes, for it would have been plain beyond contest, within the BCEA, that the provision’s notice requirements, like those of section 37, are peremptory, and that notice given in violation of them is null and void.

Counsel’s reply is nevertheless telling. For it concedes the logic of the provision’s structure and language. And those the location of the provision, in the LRA, rather than in the BCEA, cannot change.

[70] When section 189A was enacted in 2002 and provided that the employer “may” give notice of termination in mass retrenchments in accordance with the BCEA, but only after the specified periods had elapsed, its provisions had a specific meaning and effect. This was to render short notice invalid, and to make any ensuing dismissals null and void. The opposing reading would substantially attenuate the effect of the enacted employment protections.

[71] In addition to being faithful to statutory language of the provision, the conclusion here conforms with the doctrinal development of employment law, as overwritten by statute law. Since the Labour Appeal Court derived support for its approach from that history, it is necessary to pause to consider it.

[72] In perhaps the most celebrated case, Schierhout, a public servant who had been “illegally retired” in breach of a peremptory provision of a statute sought, on tender of his services, to claim the salary he had lost. His entitlement depended on whether his removal was a nullity.

The Appellate Division held per Innes CJ it was and applied the “fundamental principle of our law that a thing done contrary to the direct prohibition of the law is void and of no force”. In doing so, it distinguished Mr Schierhout’s position as a statute-protected employee from that of ordinary employees who, on wrongful or “arbitrary” dismissal, cannot claim their salary, but instead are confined to claiming whatever damages they may be able to prove they suffered in consequence of the employer’s wrongful act in dismissing them.

[73] Schierhout thus afforded support for two propositions.

  • The first is that disregard of peremptory statutory requirements leads to nullity.
  • The second is that specific performance of an irregularly terminated contract of employment is not available to ordinary (non-statutory) employees.

Innes CJ said that “the only remedy open to an ordinary servant who has been wrongfully dismissed is an action for damages”, and that the courts “will not decree specific performance” of this class of contract.

[74] Since Schierhout, the rigidity of both propositions has been substantially tempered.

  • First, our courts accept that whether violating a statutory prohibition has the consequence of nullity depends on a broad understanding of the statute’s purpose and meaning. That consequence depends on the subject-matter of the prohibition, its purpose in the context of the legislation, the remedies provided for disregard of it, the mischief it was designed to remedy and any untoward consequences that invalidity may wreak.

[75] It is the second proposition in Schierhout on which the Labour Appeal Court relied in coming to its conclusion.

This was the Appellate Division’s “implicit acceptance” that a wrongful or statutorily invalid termination can bring the employment contract to an end. This, the Court said, had “persisted in our labour law”. This led the Labour Appeal Court to observe that dismissal under the LRA includes forms of employment termination far broader than only lawful cancellation. It was this consideration that persuaded the Court that dismissal under section 189A falls within the broad ambit of a section 186 dismissal, even if on short notice in breach of the provision.

[76] The Labour Appeal Court was also alert to the fact that the second proposition in Schierhout had been superseded by judicial development.

In Stag Packings, a Full Court held that there is no rule of law that a party’s wrongful cancellation of a contract of personal service puts an end to the contract even though the other party does not accept the repudiation.

There is in other words no rule that the employment contract can be terminated unilaterally, and thereby brought to an end. From this it follows that there is no absolute prohibition against granting a remedy of specific performance to wrongfully dismissed employees, even if not statute-protected. Whether specific performance is in fact granted depends on practical considerations and lies in the court’s discretion.

[77] Despite this, the Labour Appeal Court found support for its approach in the broad notion, which it said Schierhout entailed, that an invalid termination could nevertheless put a unilateral end to a contract of employment. In the balance the Court struck in approaching the meaning of the provisions, it erred. In doing so, it ascribed too much weight to the original statement in Schierhout, and too little to significant later developments that have superseded it. These have reaffirmed that unilateral conduct by the employer does not of itself terminate the contract of employment.

[78] Section 189A resonates with this strong stream of contractual employment doctrine. And the stream contributes force to the conclusion that De Beers and Revan were correct, and the Labour Appeal Court in the present case incorrect.

Is retrospective reinstatement automatic?

[79] The Labour Appeal Court gave prominence in its reasoning to the idea that the inefficacy of short notice, and the nullity of resultant dismissals, would lead “automatically” to the remedy of reinstatement, with, it implied, full back pay for those reinstated. This led the Court to reject the conclusion that non-compliant dismissals were null and void. The Court seemed to adopt a more nuanced approach to remedy – finding that other provisions of the LRA dealing with unfair dismissal provided it. Hence, according to the Labour Appeal Court, non-compliant dismissals in violation of section 189A were just ordinary unfair dismissals, subject to the ordinary remedies provided elsewhere in the LRA.

[80] The conclusion that short notice dismissals under section 189A are subject to the ordinary remedies in section 193, the Labour Appeal Court found, would “lead to more proportionate and less capricious consequences” for non-compliance.

In this Court, Edcon supported the Labour Appeal Court’s analysis and approach.

[81] These considerations are consequentialist in tone and effect. But are they correct? NUMSA in its argument disavowed them. It rejected the notion that short notice dismissal in violation of section 189A would automatically entitle employees to reinstatement.

On the contrary, NUMSA contended that reinstatement was not automatic. Whether the court hearing the employee applicants’ claim granted them reinstatement, and on what conditions, was a question for its discretion.

[82] In oral argument, the employee applicants endorsed this approach. This led to the paradox that the employees embraced a weaker remedy for short-notice dismissals under section 189A than the employer insisted would be the consequence of their argument.

[83] The employee applicants and NUMSA are in my view correct. The fact that the dismissals are null and void does not entitle employees subjected to them, without more, to the remedy of full retrospective reinstatement.

That has never been the approach of South African courts. For instance, employees dismissed on short notice in violation of the BCEA have not always been granted full retrospective reinstatement. This is in keeping with the long-standing notion that remedy depends on the discretion of the Court that hears the employee applicants’ claim. There is no reason to think that the enactment of section 189A entailed a radical abandonment of this approach to remedy.

[84] It is worth stressing that the question of the remedy to be afforded to the employee applicants in the proceedings now pending elsewhere is not before us. Despite this, the judgment of Zondo J undertakes an exposition of the remedies expressly provided in section 189A but fails to acknowledge the foundational remedy that lies in the breach of the statute, generally, itself.

We are concerned with it only so far as it bears on interpretation. And once one removes the consequentialist sting from the arguments that induced the Labour Appeal Court to hold that a short-notice dismissal under section 189A is not a nullity, the statutory consequence may freely flow: the dismissal is indeed a nullity.

Section 189A(14) empowers the Labour Court to grant relief provided for in section 158(1)(a). This includes a declaratory order. This may also include an order declaring non-compliant dismissals invalid.

Conclusion

[85] If notice of termination in retrenchments subject to section 189A does not comply with the provisions of section 189A(8)(b)(i), where no facilitator has been appointed, as here, there is no valid termination. In that event, the contract of employment is not terminated. And if the contract of employment is not terminated, there is no dismissal in terms of section 186(1)(a) of the LRA.

[86] The employee applicants and NUMSA are thus right. When Edcon dismissed the individual employees without waiting for the time periods in section 189A(8) to expire, it acted without effect in law. The dismissals were a nullity. They had no force and effect. The question of what remedy flows in practice from this conclusion must await another day and another court.

Court summary

Media Summary

On Friday, 22 January 2016 the Constitutional Court handed down judgment in a matter concerning the interpretation of a provision of the Labour Relations Act which regulates large-scale dismissals for operational requirements.

During 2013 and 2014, the respondent, Edcon Limited (Edcon), retrenched over 3000 employees. Before the dismissals were effected, Edcon gave the employees notices of termination of their contracts of employment. These notices were given prior to the expiry of the periods prescribed by section 189A(8) of the Labour Relations Act (Act) and therefore were in breach of the Act.

The main issue in the Labour Appeal Court was whether Edcon’s failure to comply with the prescribed procedures in section 189A(8) of the Act meant that the dismissals were invalid. The Court overruled its earlier decisions which had held that premature termination notices result in invalid dismissals. It held that although Edcon had not complied with the requirements of the Act, the dismissals were not invalid.

Before the Constitutional Court, the applicants, former Edcon employees and their representative trade union, the National Union of Metalworkers of South Africa (NUMSA), challenged the Labour Appeal Court decision and sought reinstatement with full back-payment. Principally they argued that the Act used the word “must” which indicates that an employer such as Edcon was obliged to comply with the prescribed procedures before dismissing the employees and failure to do so resulted in invalid dismissals. Edcon argued that the fact that there was no compliance with the prescribed procedures meant that the dismissals may be unfair, but not invalid.

Minority judgment

The minority judgment written by Cameron J (Van der Westhuizen J concurring) held that leave to appeal must be granted. Flowing from its interpretation of section 189A of the Act, it agreed with the applicants’ contention that the 30-60 day period allowed under the Act suspends the employer’s power to dismiss and relegate the relief available under section 189A(7). The judgment disagreed with Edcon’s argument that section 189A is a ‘bolt-on’ to section 189, and rather found that the section was specific to mass retrenchments. The time period mandated under the Act creates a ‘dismissal-free’ zone during which employees must be safe from dismissal until the statutory periods have elapsed. Refusing the Labour Appeal Court’s characterisation of the section 189A(9) and (13) remedies as unavailable for short notice, the minority disagreed with the purposive interpretation of section 189A (supported by the majority). The judgment states that a strike remedy does not properly deal with the mischief that section 189A seeks to prevent. Rather, the failure to comply rendered the dismissals a nullity. Cameron J held that the dismissals, though indeed null and void, did not entitle the employees subjected to them to full retrospective reinstatement. The judgement concluded that the dismissals by Edcon outside of the time periods in section 189A(8) were without effect in law and thus a nullity.

Majority judgment

The majority judgment penned by Zondo J (Mogoeng CJ, Moseneke DCJ, Jafta J, Khampepe J, Madlanga J, Matojane AJ, Nkabinde J and Wallis AJ concurring), agreed that leave to appeal should be granted but disagreed that dismissals effected in breach of section 189A(8) resulted in invalid dismissals. He took the view that the Act did not contemplate invalid dismissals and that the procedures with which Edcon failed to comply constituted requirements for the procedural fairness aspect of dismissals, and as such, related to unfair dismissals. He pointed out that the concept of an invalid dismissal is foreign to the current Act, and that the applicants should have utilised the mechanisms provided under the Act to deal with the dismissal dispute instead of seeking to have the dismissals declared invalid. Zondo J thus held that the dismissals could be unfair but not invalid.

Zondo J went on to point out that for dismissals effected in breach of section 189A(8), the remedies are those set out in the Act, particularly in section 189A(8), (9) and (13). Those remedies do not contemplate any order declaring dismissals invalid. They include going on strike and applying to the Labour Court for a variety of orders including an order reinstating dismissed employees pending compliance by the employer with the procedural requirements. He further held that under the Act, there is no right not to be unlawfully dismissed but there is a right not to be unfairly dismissed. Further, Zondo J held that the applicable principle is that for a breach of the Act, the remedy must be sought in the Act and not at common law. The majority dismissed the appeal but made no order as to costs.